OneMain Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Moshe Orenbuch - TD Cowen - Analyst : Great, thanks so much and congratulations, Doug. I was hoping you could expand a little bit on the benefits, of the ILC, what it can do in terms of, you talked a little bit about market expansion, can you discuss that just in a little more detail? Thanks.

Question: Moshe Orenbuch - TD Cowen - Analyst : Got it. Maybe just on credit, I guess, you mentioned in the slides, Jenny, you spoke about it that there's been essentially better performance on the late stage, if you will, the early stage kind of being in line with seasonal patterns in the late stage, kind of better than is there like some underlying reason there that is happening? Is it that the performance is, it does it in any way relate to the front book, back book performance, and any kind of help you can give us there would be good? Thanks.

Question: Moshe Orenbuch - TD Cowen - Analyst : Thanks very much.

Question: Mark Devries - Deutsche Bank - Analyst : Yeah, thanks. It makes a lot of sense that your reserve ratio is mostly unchanged despite the strong credit trends just given the macro uncertainty, though if uncertainty doesn't really transition to a weaker economy, how should we expect that reserve ratio to kind of move over the course of the year if these strong credit trends hold?

Question: Mark Devries - Deutsche Bank - Analyst : Okay, got it. And then, Doug, in your prepared comments, you alluded to the kind of the ability when you're ready to kind of accelerate growth in the new products. Just curious what you want to see but before you really look to accelerate the growth in car and auto?

Question: Mark Devries - Deutsche Bank - Analyst : Got it, thank you.

Question: Rich Shane - J.P. Morgan Chase & Co. - Analyst : Thanks guys for taking my questions. Look, one of the things we see in the first quarter results is a nice benefit from recoveries on the charge off rate. I'm curious if that is a function of stronger used car prices or it is a function of basically catch up you have more recoveries as you emerge from this period of elevated charge offs and what you expect in terms of recoveries going forward?

Question: Rich Shane - J.P. Morgan Chase & Co. - Analyst : Got it. And on sales of chart shop receivables, how is pricing compared to a year ago? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, OMF.N - Q1 2025 OneMain Holdings Inc Earnings Call

Question: Rich Shane - J.P. Morgan Chase & Co. - Analyst : Terrific. Thank you very much, Jenny.

Question: Michael Kaye - Wells Fargo Securities, LLC - Analyst : Oh, sorry about that. I had a quick question on the ILC. So you know if you are in fact approved, I wanted to confirm, do you plan to put all your originations through the bank, not just a relatively small amount of prime loans which will likely stay in the bank? I mean, you could probably say that the ILC is going to expand the consumer's access to credit, but critics might say this is just an attempt to bypass the usury laws by pushing all the originations through a small ILC bank. Just love to hear your thoughts on that.

Question: Michael Kaye - Wells Fargo Securities, LLC - Analyst : All right. Okay. I know you don't -- I don't see disclosing it in the press earnings press release, but you know like calculated the credit card net charge off rate, very high. It's up to 20%, up from 17% last quarter. I just wanted to confirm you're still comfortable with the credit performance?

Question: Michael Kaye - Wells Fargo Securities, LLC - Analyst : Okay. All right. Thank you.

Question: Mihir Bhatia - BofA Global Research - Analyst : Right, yeah. Yeah, hi, good morning. Thank you for taking my question. Wanted to start with the yield outlook and the competitive intensity. I think, Jenny, you mentioned in your comments that there's modest, improvements in yields still are potentially subject to competitive intensity. So maybe just talk about that a little bit. What are you seeing in the market? Did you see competitors pull back in April with the noise around macro and tariffs? Just any comments on competitive intensity that you're seeing? Thank you.

Question: Mihir Bhatia - BofA Global Research - Analyst : Okay, thank you for that. And then maybe just switching you back to credit for a second, your credit outlook assumes no inflation with tariffs coming. What I wanted to understand a little bit more was the impact of inflation on your credit performance. How fast does it come through, given that you tightened underwriting, added that 30% stress layer, how would it be a little different now compared to like 2022, 2023 when you when inflation had an effect on your losses? Just trying to understand, just the tolerance around that assumption, if you will? Thank you.

Question: Mihir Bhatia - BofA Global Research - Analyst : Got it. And apologies for mistaking. I do see no significant changes in the information. Thank you.

Question: Kyle Joseph - Stevens - Analyst : Hey, good morning. Thanks for taking my questions. Most have been answered, but just wanted to get a sense, obviously you guys have a tremendous portfolio of consumers across a number of products, but just wanted to hear if you're seeing any sort of shift in consumer behavior. Obviously, we see the data in terms of consumer confidence, but you know on the auto side was there any sort of pull forward? On the card side, have you seen any sort of spend or volume, discrepancies? And then I guess in terms of on the personal loan, any sort of shift in demand or willingness to borrow or less of a willingness to borrow, I'd say?

Question: Kyle Joseph - Stevens - Analyst : Okay, got it, great. Thanks for taking my question.

Question: Vincent Caintic - BTIG - Analyst : Hi, good morning. Thank you for taking my question. I had a follow up on the credit reserve rate, so a lot of good results and commentary about credit performance, and looking at that credit reserve rate of 11.5%, I assume that it would have with the credit trends, it would have otherwise gotten lower. So I just want to understand in that 11.5%, how much conservatism is baked in if you can maybe talk about the assumptions you're making like, with macro trends like unemployment rates, and what would cause credit reserves who would have to change? Like I would assume that you can even hit the high end of your loss rate guidance of 8.8% and still be okay with that 11.5%. So I just want to understand that the level of conservatism that's paid into that. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, OMF.N - Q1 2025 OneMain Holdings Inc Earnings Call

Question: Vincent Caintic - BTIG - Analyst : Okay, that makes sense. Thank you. And then just kind of lately if you could talk about your underwriting posture, it doesn't sound like that has changed even with credit seemingly getting better, if you could talk about what it would take to either feel more comfortable, or on the other hand, like, what macro conditions where you have to feel like, you would tighten further? Thank you.

Question: Vincent Caintic - BTIG - Analyst : Great, that's very helpful. Thank you.

Question: John Pancari - Evercore ISI Group - Analyst : Morning. Back to the card portfolio, how is, if you could comment just a little bit on how credit card delinquency formation is trending, is that also trending in line with expectations like you noted for the card charge-offs? And then on the charge off front for card, I know you noted the 15% to 17% loss rate target. And that it's trending in line with that, is that 15% to 17% target an expectation for 2025, or is that more of a longer-term expectation for that book? Thanks.

Question: John Pancari - Evercore ISI Group - Analyst : Got it. Okay, thanks, Jenny. And then separately, I think you're sitting on relatively solid capital levels here from the standpoint of M&A. I wonder if you could discuss any interest in future acquisitions here to build out the areas of growth, including auto in addition to the foresight deal and then potentially on the card side or even on the insurance side is there -- if you could just talk about any interest there to look inorganically for deals or do you think that opportunity would be kind of put to the sidelines here as you focus on the ILC?